Agenda item

Report of the Chief Executive on the forecast revenue outturn position as at 30 September (quarter 2) for the financial year 2020/21.

(1)   Cabinet noted the revenue forecast outturn position as at Quarter 2.

(2)   Cabinet approved the virement, detailed in section 3.2

(3)   Cabinet noted the position on debts set out in section 5 of the report.

Report of the Chief Executive on the forecast revenue outturn position as at 30 September (Quarter 2) for the financial year 2020/21.

As noted in the report, there was an adverse variance on the General Fund net cost of services of £3.3M.

All of this is related to the estimated shortfalls of income, or additional costs, as a result of the impact of Covid.  This has been partly offset by government funding of Covid losses of £2.0M, referred to under “Other Government Grants” in Appendix A1.  This leaves a net Covid impact for 2020/21 0f £1.3M.  £405,000 of this has been absorbed by the release of an earmarked reserve established for this purpose at the end of 2019/20.

Compared to the situation at the end of the first quarter, and the Covid financial impact assessment discussed at the Cabinet meeting in August, the estimated adverse impact of the pandemic for 2020/21 at the net cost of service level has risen by £0.5M, from £2.8M.  Above all, this is due to prolonged loss of income at Campus West, as we have been unable to reopen all facilities there.

We have also revised the estimated loss of parking income upwards, but, against that, it is now estimated that planning fees will come in above the original budget.

The increased estimated Covid impact at the net cost of services level has been offset by additional government support under the income guarantee scheme, for which an application for £553,000 has been lodged.  So the net Covid impact remains at £1.3M, as reported to August Cabinet.  Furthermore, an additional £300,000 of government support for WHBC has since been announced for 2020/21, but that announcement came too late to be incorporated into this analysis.  As noted at the Cabinet meeting in August, the impact upon the General Fund has also been mitigated by the use of a £405,000 Earmarked Reserve established at the end of 2019/20 for this purpose.

As highlighted in the Covid impact report discussed at the Cabinet meeting in August, estimated shortfalls of £2.0M Council Tax and business rates will impact upon the 2021/22 financial year and beyond, rather than the current year.

The remaining non-Covid variances are forecast to net out.  A favourable variance of garden waste income and planning fees being compensated for by an adverse variance on Local Plan costs.  An Earmarked Reserve does exist to cover Local Plan costs up to a point.

There are no substantial variances in the HRA, as rent collection is currently holding up.   The overall adverse variances noted in Section 4.1 have been absorbed by adjusting the Revenue Contribution to Capital.   The announcement that Right to Buy receipts could be held onto for somewhat longer has relieved some of the previously estimated Covid related pressure on the HRA, and recent projections indicate that there is no imminent need to remit such receipts to the government.

Debtors, particularly for our commercial estate, have, as expected, risen considerably over the 6 months to 30 September 2020.  Much of this is Covid related, and is the result of deferred payment plans being established with commercial tenants.  For now, we have no reason to amend our earlier estimate of a loss of commercial rental income due to Covid of £450,000.

As mentioned in the previous agenda item, considerable Covid related uncertainties remain, and the 2021/22 budget will be very challenging.  But the Council can be pleased that our past financial prudence means we have so far been in a position to absorb the shock without having to cut front line budgets.

RESOLVED:

(1)   Cabinet noted the revenue forecast outturn position as at Quarter 2.

(2)   Cabinet approved the virement, detailed in section 3.2

(3)   Cabinet noted the position on debts set out in section 5 of the report.